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While budget negotiations have predictably devolved into partisan sniping, farm bill leaders are expressing optimism that a new farm bill can be quickly passed.

“We want a bill – a five-year farm bill. We’re doing everything we can to make that happen. We see enormous problems with an extension (of the 2008 farm bill) of any duration.” -- Roger Johnson, NFU president.

White House budget, EPA

On the White House/Congress budget negotiations and taxes…

“We’re supportive of continuing the provision that exists right now on the estate tax. That’s a $5 million exemption and 35 percent tax rate.

“We think a bigger issue than the estate tax is the alternative minimum tax. The estate tax only comes into play when someone dies and then affects the heirs. The alternative minimum tax will affect a broad swath of people if it isn’t fixed. It was put in place many years ago in an attempt to catch very high income earners from being able to escape any sort of taxation…

“What’s happened, given the inflation that’s occurred over the years, anyone earning in the area of $60,000 is likely to be nicked by the alternative minimum tax. That’s an example of a tax – not unlike the estate tax – where Congress has repeatedly done a ‘patch.’ They’ll fix it for a year, or two, and then the problem arises again.

“There’s a lot of talk about meaningful, major tax reform. We’re hopeful that a number of these kinds of issues will be resolved on a longer term basis.”

“We were very pleased by the EPA. We were less than pleased by the decision from API (American Petroleum Institute) to fight against the RFS.”

Note: the API filed suit against the EPA following its waiver decision. More here.

“The EPA decision was absolutely the right one. I have a background in economics and what they basically said -- after doing extensive economic analyses through the USDA – was that if the RFS was waived it would have an impact of less than 1 percent on the price of corn. I believe that projection is entirely correct.

“What drives the use of corn and ethanol today is both the price of corn and the value of gasoline. As long as those two variables are in the right relationship, they’ll produce ethanol. Now, that may not lead to the building of another ethanol plant – that’s a whole different decision. But if the plant is already there it will produce ethanol if variable costs, and a bit more, can be covered. They can do that with the current price relationship.

“Secondly, the much bigger issue at play here is: what would waiving the RFS do to the rest of the biofuels industry? By ‘rest of the industry’ I’m not talking so much talking about corn-based ethanol as I am about advanced biofuels, cellulosic ethanol. That whole sector is in roughly the same place that corn-based ethanol was in 15 or 20 years ago. It’s barely, marginally economically competitive. It will likely be competitive if there is some long-term market assurance. If there isn’t, however, you just aren’t going to bring investment dollars in.

“The real promise of biofuels is when we can turn waste materials and woody biomass into useable biofuel products. Then, you have something really special and we’re on the verge of that happening. Waiving the RFS would send a message to that sector of the biofuels industry is, ‘You can’t depend on public policy to stay the same. There’s too much risk.’ With that, market opportunities would disappear, very possibly, overnight.

“If you don’t get over the ‘valley of death’ – as they call it in regards to economic development – where you try new technologies or procedures that cost more than they will once all the bugs are worked out, the effort goes belly-up.”